Société BIC SA (BB) Earnings Call Transcript & Summary

Hello, and welcome to the BIC Full Year Results 2020 Call. My name is Rinkel, and I will be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Sophie Palliez-Capian, to begin today's conference. Thank you.

Thank you, Rinkel. Good afternoon and good morning, everyone, and thanks for joining this Full Year Results 2020 Conference Call for BIC. As usual, the call will be hosted by our Chief Executive Officer, Gonzalve Bich; and our Chief Financial Officer, Chad Spooner. They will start by a short presentation of our results, and it will be followed by a Q&A session. Let me give the floor to Gonzalve. Gonzalve?

Thank you, Sophie, and good day, everyone. Thank you for joining and attending this call. Before I start reviewing our 2020 performance in detail and how we foresee 2021, I'd like to share some insights we've gained as we look back in last year. There's no question that 2020 was a challenging year for BIC and the world. As I reflect on the obstacles we faced and how we overcame them, I believe that we achieved a solid operating performance and perhaps even more importantly, showed our resilience to the business. While we have more to overcome in 2021, I want to take a moment to thank the BIC team for focusing on what we were able to control in this environment and for their rigorous execution. Their teamwork resulted in our demonstrating strength in business continuity, commercial execution, efficiency, cost control and operating cash flow generation throughout the year. We have become proficient in our operating model, stronger and more agile as a team and are fully on track to achieve our transformation. While I'm pleased with these successes, COVID-19 has and will continue to have a lasting impact on consumption patterns and shopping behaviors. These continue to affect our categories in a myriad of ways. I am confident that our Horizon Plan positions us to meet these changes head-on and puts us on a trajectory towards accelerated, innovative and sustainable growth. Let's take a closer look at our markets in 2020. In Stationery, the overall Writing Instruments segment was hit hard by the shift to e-learning and remote working as people temporarily adapted to new rhythms and norm. A bright spot with the Coloring segment, which grew mid-single digits across key markets as consumers leaned into more artistic and creative activities during lockdown period. In Lighters, foot traffic -- lower foot traffic and outpaced demand for hygiene products and grocery products prompted convenience stores to adapt by reducing their inventory of products like Pocket Lighters. On the positive side, Utility Lighters enjoyed growing popularity and usage during the pandemic due to increased home and outdoor cooking and the use of candle. This segment delivered a strong performance, growing double-digit in the U.S. Turning to Shavers, lockdowns and remote working changed men's and women's shaving habit. These resulted in market declines in our key geographies in both the one-piece and refillable segments. The pandemic did, however, accelerate the shift to e-commerce with online shaver market growing 50% in value in the U.S. In this challenging context, we focus on what we can control. Thanks to strong teamwork and solid execution, we increased or maintained market share in growing strategic product segments and in key markets. As you can see, we made noticeable gains in the Coloring and Permanent Markers segments across key countries such as the U.S., Brazil, France and the U.K., a confirmation of consumer trust in our brand and our ability to succeed as we look to expand into the arts and crafts space. We gained share in Pocket Lighters in all our key markets, including Brazil, the U.S., Mexico, Germany and Russia. Utility Lighters also delivered solid results, gaining 4.3 points in market share in the U.S. And lastly, in Shaver, we outperformed most of our markets worldwide from the U.S. to Brazil and Europe as our teams worked relentlessly and effective promotional activities, combined with our success in premium products, like the BIC Flex Hybrid and BIC Soleil ranges. The strong shift to online purchases during the pandemic resulted in an 18% increase in net sales in e-commerce with double-digit growth across key geographies like the U.S., Europe, Latin America and India. Our direct-to-consumer sales more than doubled, a 118% growth rate. This went hand-in-hand with healthy conversions and favorable reviews on our D2C website, bic.com, in the U.S. and France. In line with our goal of engaging with consumers directly as part of our transformation journey, we were rightfully invested behind our strategies and dedicated 83% of media investments to online channels. Though we're pleased with our progress in e-commerce, this slide paints the picture of the pandemic's impacts on our customers. Pure players with Amazon leading grew 85% through 2020. And their share of our overall e-commerce sales climbed to 14 points. At the same time, the pandemic lockdowns caused certain omnichannel retailer sales to plummet. The brunt of this came from the B2B business like office suppliers due to office closures. Sales to omniretailers declined by 10% yearly with B2B channels down 20%. Looking ahead, our overall e-commerce strategy is on track. We're building meaningful digital capabilities within the organization to accelerate online growth, paving the way to become a genuine omnichannel company. A central piece of our Horizon Plan is harnessing innovation to accelerate growth. And in 2020, we demonstrated that we are on track to do just that, with innovation contributing 7.6% to net sales, up 1 point versus 2019. I'm excited to see the success of our new products like EZ Reach lighter, which, in just 6 months, has achieved 0.5 market share value in the U.S. The launch of PrevaGuard, an antimicrobial pen, is another excellent example of how quickly we're responding to what consumers want. In this case, we reacted to their understandable obsession with germs. In just a few short months, we were able to move this product from concept to shelf. Also in 2020, we signed 2 exciting partnerships that moved BIC's open innovation system forward. We teamed up with Iprova to create our invention lab using their machine learning-based, data-driven approach to innovation to help us anticipate and respond effectively to consumer needs. This lab accounted for more than 10% of our total patent filings only 6 months after opening. Our collaboration with the Plug and Play platform, one of the world's largest start-up incubators, gives us access to a diverse range of talent that can help us expand our innovation capabilities and support our journey towards more sustainable products. These are some of the latest steps in our ongoing commitment to nurturing an open ecosystem for discovering and integrating the latest technology internally as well as externally. And it's only the beginning of our transformation towards becoming more agile and innovative to better address consumer ever-changing trends. Looking forward to 2021, several new and innovative products will be added to our brand portfolio, all consistent with our horizon plan to bring more value and sustainable offerings to consumers. In Stationery, we will extend the BIC Cristal family with a BIC Cristal ReNew, a premium refillable version of our iconic Cristal [ leading the tower ]. In Lighters, we will test launch the BIC Maxi Ecolutions, which will offer consumers equal levels of quality and safety with an environmental impact reduced by 10% compared to the classic BIC Maxi lighter. And in Shaver, we will introduce our new sustainable development hybrid range with both male and female one-piece razors that you can refill with a handle made from recycled materials and housed in 100% recyclable packaging. I'd like to shift now to 2 key acquisitions in 2020 that position us to boost profitable growth effectively in line with our Horizon Plan. In July, we acquired Djeep, which consolidates our leadership position in Lighters. The integration is well on track and will support our shift towards a value-driven model, favoring premium and personalized design. In December, we acquired Rocketbook. This marks BIC's entrance into the fast-growing digital writing segment. Rocketbook provides simple, elegant and accessible solutions to digital writing, which is very much in line with BIC's vision to bring simplicity and joy to everyday life. I'm very excited about this next step for BIC and the potential it brings as we leverage on their unique brand-building skills and expand our presence into the human expression space. We've started to consolidate Rocketbook this quarter, and I'm thrilled to share that they had an outstanding performance during the key holiday season at the end of 2020. Their sales on Amazon in the U.S. grew by more than 80% versus fourth quarter 2019, and their U.S. direct-to-consumer business increased by 30%. In November last year, we took our sustainability journey to the next level with our new commitments to reducing plastics dramatically in our products and packaging by 2030. These ambitious targets are a continuation of our historical pledge to sustainability, embedded in our Writing the Future commitment, one of the most important in this fight against climate change. In 2020, we continued to reduce greenhouse gas emissions, and we achieved our goal of 80% renewable electricity 5 years ahead of schedule. Our team's health and safety remains an utmost priority. And I'm pleased to say that reportable accidents saw a 30% decrease compared to last year. With a significant focus on the health of our team members, we were able to keep them safe and keep production up and running in most geographies despite the pandemic. I'm proud of the measures that our team took to quickly ensure that we were meeting and, in many cases, exceeding established local protocols to keep our team members healthy. We continued our efforts to help children succeed in their education. In 2020, we reached more than 57 million children around the world, many through innovative digital programs. Since 2018, we have served 118 million children, which is a tremendous source of pride for the team. Before moving to shareholder return, let's take a quick look at our financial performance in 2020, which Chad will take you through in more detail later during the call. Net sales for the full year was EUR 1.6279 billion, down 12.6% on a comparative basis. Normalized IFO was at EUR 229.1 million with a 14.1% margin, in line with our guidance of above 13.5%. This was a solid performance achieved by prudent management of operating expenses and the savings generated by our transformation plan. Normalized earnings per share was at EUR 3.54, down 35.3% versus last year. Free cash flow was strong at EUR 274.5 million, thanks to a strong improvement in working capital. In line with our Horizon Plan capital allocation policy, 2021 shareholder return is maintained versus 2020 levels at EUR 121 million. It includes EUR 81 million dividend payment through a EUR 1.8 per share, subject to approval at our next Annual General Meeting in May and a EUR 40 million share buyback program. As announced in December, we will partner with Exane BNP Paribas to pioneer the first European impact share buyback and allocate part of the funds to J-PAL, the global research center working to reduce poverty, and to the BIC Foundation for Education. I'm thrilled that BIC is a pioneer in this space as we are historically committed to the education cause, notably through our comprehensive sustainability program Writing the Future, Together. Today, sustainability and corporate purpose continues to be meaningful to companies and consumers, and this groundbreaking program will accelerate the path towards genuine long-term value creation for all our stakeholders. As I mentioned earlier, Stationery was undoubtedly the category most negatively impacted by the worldwide school and office closures. Back-to-school seasons were delayed or canceled in both hemispheres. Highly dependent on convenience and traditional trade channels, Latin America, Africa and India accounted for almost 60% of the total category decline year-on-year. Nevertheless, our teams demonstrated strong operational execution, and 2020 yielded several positives worth noting. We maintained share in Europe, thanks to great visibility in stores, as a result of excellent partnership with our customers and effective and efficient merchandising and brand support. In the U.S., while the overall stationery market was down 12.2% year-on-year, we held share and outperformed in Coloring and Permanent Markers, thanks to the BodyMark and BIC Kids Coloring ranges. These solid executional results were visible in back-to-school replenishment orders, which were around 10% higher than in 2019 in both France and the U.S. It was an incredibly challenging year in Latin America with a competitive environment that the COVID-19 pandemic exacerbated. In Mexico, schools have been closed since March. And as a result, more than 33 million students are still remote-learning. India is another area where we face tremendous headwinds. Schools and office closures have taken a toll, as have mobility restrictions limiting the sale of nonessential items. The result was a close to 40% market decline. BIC's historic ballpoint pen was the segment most affected largely due to remote learning conditions. We nonetheless remain #1, reaching 25.1% market share in value. Turning to Lighters. As I mentioned already, the category was affected by lockdowns in all key markets, although there were regional differences. Europe, where traditional stores play a significant role, saw relatively weak performance for the year, notably in France, Belgium and the U.K. However, we continued to grow in Russia and Germany due to new listings and effective promotional activities, 2 of our invest-to-grow markets. In North America, despite a soft start to the year, full year Lighter net sales were flat, which is a great result given the current environment. Momentum in the second half was driven by successful price adjustment implemented in June as well as solid promotional activities, which offset the decline. BIC Pocket Lighter sales outperformed the flattish market, gaining 0.8 points value share. The Utility Lighter segment in which we've invested these last few years grew 27.1% in 2020, bolstered by shopping trends as consumers turn to home grilling and other lighting occasions. We gained 4.3 points of market share. At the end of 2020, Utility Lighter sales accounted for 15% of our sales -- Lighter sales in North America, plus 6 points compared to 2019. Our overall market performance was boosted by introducing our new EZ Reach Lighter, which, as I mentioned earlier, has successfully grown to 0.5% market share in the first 6 months of its launch. EZ Reach continues to outperform in 2021, reaching more than 3% value share in January. Latin America was a mixed bag with an essential -- especially challenging situation in Mexico. At the same time, Brazil made gains in market share, up 0.7 points. Turning now to Shaver. Evolving consumer habits were compounded by lockdown conditions that changed personal grooming routines and regimens in various ways. [indiscernible] by our historical value proposition and the success of our new products, we outperformed in all regions in both female and male segments. We gained 0.6 points in the U.K. and continued to gain share in Russia and Poland. Overall, in Shaver, we outperformed the European market for the third consecutive year, driven by both male and female products. Both core and new products did well in the U.S., especially amongst men. Thanks to a more aggressive promotional strategy and placement of gift sets, we won 1 point value share of the one-piece market, which declined 6.4%. The Flex 5 Hybrid and Soleil Sensitive Advanced range performed well; and Us, our gender-neutral refillable razor, continued to show positive results from its launch. Brazil's sellout performance was also good. Our product trade-up strategy continued to prove effective despite the pandemic. We picked up 0.7 points in value share, largely thanks to outstanding performance in the women's segment and a strong promotional push on traditional business for an impressive high of 23% value market share in 2020. This ends the review of our operational performance, and I'll now leave the floor to Chad to take you through our consolidated financial figures.

Thank you, Gonzalve. I will begin by reviewing the net sales results for both the fourth quarter and the full year of 2020. On an as-reported basis, fourth quarter net sales were down 18.2% versus last year. On a comparative basis, our net sales were down 10.7%. Currency fluctuations had a negative impact of minus 8.1 points. This was mainly due to the continuing sharp decline of the Brazilian real and the decline of the U.S. dollar against the euro. Net sales for the full year 2020 totaled EUR 1.6279 billion, down 16.5% as reported, down 12.6% on a comparative basis. Here again, the negative impact of currency fluctuations of minus 4.2 points was mainly attributable to the decline of the Brazilian real and the decline in the U.S. dollar against the euro. The COVID-19 impact on the decrease for 2020 net sales is estimated at around minus 10 points. The perimeter impact adjustment includes mainly the acquisitions of Djeep and Lucky Stationery in Nigeria. As a reminder, due to Argentina's hyperinflation, we are excluding Argentina from our net sales on a comparative basis. On Slide 15, you can see the key elements of the summarized P&L results. The gross profit margin for 2020 decreased 2.0 points to 48.1% compared to 50.1% in 2019. Normalized IFO for full year 2020 was EUR 229.1 million compared to EUR 331.8 million last year, with the normalized IFO margin of 14.1% this year versus 17.0% for 2019. Let me now review the NIFO margin change for the full year 2020 versus 2019. As just mentioned, the gross profit margin decreased 2.0 points to 48.1%. Excluding under absorption of fixed costs due to the COVID-19 pandemic, the gross profit margin increased by 0.6 points. This was driven by favorable foreign exchange and a decrease in raw material costs. This favorability was partially offset by unfavorable manufacturing cost absorption. A decrease in brand support had a favorable impact of 0.4 points on the NIFO margin. Operating expenses and other expenses were higher by 3.9 points, resulting from the sharp decline in net sales. In addition to this, we also had a negative impact from the costs to implement our new organization and higher incentive plan costs compared to last year. This total increase is partially offset by the other OpEx reductions across all geographies as we executed on the OpEx actions announced in May. As we cover the year-to-date nonrecurring items from left to right, we had EUR 27.2 million of restructuring costs. The main drivers of these restructurings are the transformation plan, the closure of our Ecuador factory and our recently announced Latin America and Asia commercial operations restructuring, where we moved to an indirect model in several countries. As discussed in the second quarter, we had EUR 41.7 million related to the Cello impairment on property, plant and equipment and trademark. This resulted from lower-than-anticipated sales due to India's lockdowns and, as a result, lower volume than initially anticipated, which have impacted our planned cost efficiencies. In the third quarter, we had EUR 44.1 million of favorable pension adjustment in the United States. Our year-to-date nonrecurring items also include EUR 41.8 million in cost of goods, of which EUR 35.8 million is unfavorable manufacturing cost absorption, resulting from plant closures and lower product demand due to COVID-19. There is also EUR 6.0 million of direct expenses related to additional employee protection implemented to fight against the spread of the coronavirus, items such as cleaning supplies, masks and sanitizers. We also had an impact of EUR 3.6 million in operating expenses and other expenses, mostly commercial force under activity due to COVID-19. Let me now review the NIFO margin change versus the prior year for the fourth quarter of 2020. Excluding under absorption of fixed costs due to the COVID-19 pandemic, gross profit margin increased by 1.5 points. This was driven by favorable foreign exchange, a decrease in raw material costs and the favorable impact of June price adjustments in U.S. Lighters. Brand support investments remain broadly stable. OpEx and other expenses were higher by 6.8 points, resulting from a sharp decline in net sales, the cost to implement our new organization and higher incentive plan costs compared to last year. This increase is partially offset by other OpEx reductions across all geographies. Fourth quarter 2020 nonrecurring items include EUR 13.2 million of restructuring costs, of which the transformation plan in Latin America and Asia commercial operations restructuring are among the main drivers. And for the fourth quarter, we had EUR 12.3 million in cost of goods, of which EUR 10.8 million is unfavorable manufacturing cost absorption, resulting from plant closures and lower product demand due to COVID-19. The impact from direct expenses related to additional employee protection implemented to fight against the spread of the coronavirus is EUR 1.5 million in the fourth quarter. Slide 18 shows normalized IFO to net income for the full year of 2020. Year-to-date income before tax was EUR 155.3 million compared to EUR 251.4 million in 2019. Net finance revenue was negative EUR 1.4 million compared to a negative EUR 1.3 million for the same period of 2019. Net income group share was EUR 93.7 million as reported for 2020 compared to EUR 176.1 million in 2019. Normalized net income group share was EUR 159.4 million compared to EUR 246.7 million last year. The effective tax rate for 2020 was 39.7% versus 30.0% last year. EPS group share was EUR 2.08 compared to EUR 3.91 in 2019. Normalized EPS group share decreased 35% to EUR 3.54 compared to EUR 5.47 last year. In 2020, we invested EUR 83.1 million in CapEx, the majority in Lighters being at 44% of the total. The overall CapEx level was in line with what we communicated in March 2020 in the range of EUR 80 million. On Slide 20, we see the main elements of working capital. Inventories ended the period at EUR 379.0 million and accounts receivable at EUR 409.6 million. Trade and other payables were EUR 99.5 million at the end of the year. Accounts receivable had a favorable impact on cash versus December 2019, as we closely monitored and drove our collection efforts in this challenging COVID environment where all companies are looking to conserve their cash outlays. The decrease in accounts receivable was also impacted by the lower net sales. We had particularly good cash collections in North America and also in Latin America and India despite challenges due to pressures in local markets. The decrease in inventory days compared to the end of December 2019 was a result of management's focus on inventory reduction as the impact of declining net sales challenged the company to be even more vigilant with inventory production and management. Consistent with Horizon and the focus on cash management, we generated EUR 275 million free cash flow in 2020, driven by the improvement in working capital that I just described and lower CapEx. To drive operational cash flow generation, we also reduced the amount of OpEx that were initially expected in 2020 by more than EUR 28 million. This is more than the EUR 15 million to EUR 20 million objective announced in May of 2020. This next slide summarizes the evolution of our net cash position between December 2019 and December 2020. Net cash from operating activities was EUR 357.6 million, including EUR 233.9 million in operating cash flow and EUR 123.7 million of positive impact from the change in working capital and others. Among the drivers of the working capital were the benefits from accounts receivable of EUR 100.7 million compared to December of 2019, as explained in the previous slide; and inventory, which contributed EUR 46.5 million. We invested EUR 72.5 million for acquisitions, mostly Djeep and Rocketbook. Net cash was also impacted by investments in CapEx as we invested EUR 83.1 million in 2020. Shareholder return was EUR 117.6 million in 2020, of which EUR 110.2 million dividend payment and EUR 7.4 million share buyback. The EUR 47.3 million of others is mostly related to foreign exchange. Our net cash position at the end of December 2020 was a positive EUR 183.9 million. This ends the review of our Q4 and full year 2020 consolidated results. Now let me give the floor back to Gonzalve.

Thanks, Chad. I'll now take you through our 2021 global market assumptions. They're based on Euromonitor and internal estimates at the end of last year. They do not integrate any major disruptions due to the potential acceleration of COVID-19 pandemic. In Europe, we expect markets to be flat to slightly increasing in our 3 core categories. In North America, the stationery market should rebound slowly after a low double-digit decline in 2020. The Lighter market is expected to be flat, with Utility outperforming Pocket Lighters. In Shavers, the one-piece segment should continue to decrease though at a slower pace than last year. In Latin America, we anticipate a low to mid-single-digit increase in all categories, including a high single-digit rebound in Stationery in Mexico. Finally, we expect a strong recovery in the Indian stationery market. Before I conclude with our 2021 financial outlook, I'd like to share with you what will underpin our performance this year. Organic growth will be driven by an increase in volumes versus 2020, but we do not expect to recover the 2019 levels and by new product launches and line extensions. We also expect to further gain market share in key markets. Commercial excellence and notably, revenue growth management will be a key component of our growth, with both selected price adjustments implemented locally or regionally and efficient promotional activity. Total growth will be boosted by the addition of new businesses, notably, Rocketbook, consolidated as of the 1st of January 2021. Gross margin should be flat as positive higher sales volumes and price increases will be offset by an increase in raw material costs, adverse currency impacts and negative mix due to India's rebound in sales. Consistent with Horizon, normalized income from operations margin is expected to strengthen. Increases in brand support, research and development and innovation will be more than offset by the decrease in operational expense -- operating expenses as a percent of net sales, driven by the benefit of the Invent the Future and further operating expense reductions. We will continue to focus on operating cash flow with tight controls of inventories. CapEx are expected to be 100 -- around EUR 100 million. In summary, our 2021 outlook is as follows. While we expect the overall trading environment to remain uncertain and volatile, particularly during the first half, our goal is to deliver plus 5% to plus 7% total net sales growth at constant currencies in 2021. To succeed, we will focus on increasing market share in key growing countries through new product launches, efficient promotional activities and continued e-commerce growth. In line with our Horizon Plan target, we expect to generate above EUR 200 million of free cash flow before acquisitions and disposals based on improved operating margins and strict control of CapEx and working capital. To conclude, we are entering 2021, another unpredictable year, with clear-eyed optimism. Our transformation is underway, and I'm confident that we have evolved into the right organization to face the challenges of tomorrow. This year, we will continue to focus on what we can control: operational excellence, proactive management of our business portfolio and the execution of our new consumer-focused business model. Through our Horizon business plan, we have created the momentum needed to accelerate long-term growth and create sustainable value for all our stakeholders. Thank you. I'll now open the floor for your questions.

[Operator Instructions] The first question comes from the line of Nicolas from Exane BNP Paribas.

I've got 4 questions, please. The first one, on margins. So you mentioned improving margin in 2021. Can you help us assess to what extent margin could improve this year and at least give us a range depending on the like-for-like sales development in 2021? Secondly, can you tell us a bit more about the Blade Excellence initiative? Last November, you couldn't say much on that. Can you tell more today what sort of sales it could represent in the mid- to long term? And do you expect already some contribution in 2021? Three, according to IRI, the price/mix effect on lighter in the U.S. increased quite a lot in January and February this year 2021. Does that reflect additional price adjustments from you or it's related to something else? And finally, just on the perimeter impact in 2021, if we take Djeep and Rocketbook together, what sort of sales are you expecting?

Nicolas, thanks for the questions. In regard to your first question around NIFO margin for 2021, our annual guidance is consistent with our Horizon Plan targets. First is focused on accelerated growth and sustained free cash flow generation. But in regards to 2021 margin, we expect to grow our operation -- operating margins as volume -- we see volume growth, positive price impact and lower OpEx as a percent of net sales. That will more than offset the increase in raw material costs, adverse FX and increase in brand support that we're going to do to drive our net sales growth and is a position that we'll let people know that we do see growth, but we're not giving guidance on ranges on the margin, as you probably know. And why don't I take question 4 since I'm talking? In regards to perimeter, what we should think about is Rocketbook, Djeep and dispositions [ to mopco ], it's around 200 basis points is what we're looking at from a perimeter impact.

Nicolas, thanks for your question. So on Blade Excellence, as I said in November, a little bit early to give long-term targets. Two months later, my answer really hasn't changed for you. We do have 2 existing customers and a robust pipeline that we're working through in 2021. The impact of the existing customers is not material for the total group results, but our goal is to generate the business to the pipeline that would make it so for 2022. So a lot of work for the team is yet to be done, but again, robust pipeline, strong interest from potential projects on Blade Excellence. For your question related to Jan-Feb 2021, no, we have not implemented any further price adjustments since the 1st of January '21 in the U.S. I think what you're seeing is a number of -- you're first seeing the lapping effect versus last year. So it's the price adjustment of June of 2020 into the 2021 numbers as well as probably some mix effect, owing to our gains of market share and the success of the launch of EZ Reach, which will slowly start having that mix effect impact that you're looking at in IRI.

Okay. Okay. And in terms of price adjustment, besides the U.S., have you planned anything in other regions, notably, Europe or Latin America?

Yes. As we say every year, at this time of year, we have a robust price adjustment strategy and now with revenue growth management being an even stronger pillar within the commercial team, that's definitely something that we're looking at. We look at it at a tactical and strategic level, adjusting for consumer price at the retail level. We'll be announcing those changes to our customers first, and then we'll give you more visibility probably at our Q1 results.

[Operator Instructions] Our next question comes from the line of Charles Scotti from Kepler.

I have 4 questions. Actually, the first one, on the COVID-19 impact in Q4, it was EUR 13 million [indiscernible] on EBIT. I mean can you break it down by business line, please? Still on the COVID-19 impact, just for modeling purposes, are you going to keep excluding this impact from your EBITDA adjusted in 2021 again? Third question, on the proceed from the sale of the headquarter in Clichy, why have you decided to reinvest this proceed into growth initiatives and not returning it to shareholders through a special dividend, for example? And shall we expect this a bigger M&A transaction, I mean, beyond the EUR 100 million yearly budget you have guided on? And my fourth question, on the working capital requirement, there was a substantial improvement, obviously, in 2020. Do you see room to further improve the working capital going forward?

Thank you, Charles. Why don't I start? And I'll handle 1, 2 and 4, and then I'll pass it on to Gonzalve for question number 3. So first, in regards to the COVID impact, we do not split it out by business line. But as you can assume, Stationery, obviously has the majority of the impact given the nature of its impact from back-to-school. So that's what we'll say on the COVID impact for Q4. In regards to impact for 2021, we can't predict, I don't think as anyone can, what potential lockdowns or what may come of the next 6 months with COVID. I think, as Gonzalve said, we're cautiously optimistic. We have a plan that is very reasonable. But we can't predict any type of COVID impact in advance of things happening is what we can say to that. And then in regards to working capital, the way that I think of working capital is really more of in a dollar -- more of in a euro perspective, but it's on the days perspective because that shows real operational improvement. And as you can see, the improvement we made on inventory and receivables over the total year of 2020, we definitely think there's room to continue to prove those number of days on inventory and receivables going forward. So we'll look -- we are doing a lot of work internally to drive those improvements going forward as well.

Thanks, Chad. Charles, thanks for your question. On the proceeds of the sale of the [ path ] Clichy headquarters will be moving sometime in '22. Our strategy of reinvesting in growth is absolutely consistent with the capital allocation policy that we announced as part of the Horizon strategic plan, right? So number one, we invest in the business, we invest in growth, whether that'd be manufacturing CapEx or other types of CapEx related to commercial growth or those types of activities, which, as I've mentioned before, you should see increasing over time as we balance that for more growth. The second is M&A. And when we talked about Horizon in November, it's, on average, EUR 100 million a year. Of course, some transactions will be higher than EUR 100 million. We did a few in 2020 that were lower than EUR 100 million. These proceeds really are to invest in the business. Horizon is a growth story. That's what we're looking to do. We've reframed our 3 businesses. And in human expression, there are a number of different opportunities and avenues for us to go look at where we have growth, where the brand is relevant, the products make sense, consumers are hungry. As we saw in 2020 with the lockdowns, people really wanted to be creative, use coloring, do things with their kids, and we need to tap into that, those higher-growth segments that we'll bridge for tomorrow, all while, and then that's what we're doing this year, having sustained shareholder returns.

Okay. I have a follow-up question. What is the right level of OpEx for you in a normal year? Or basically, to make it more simple, if revenues go back to 2019, how should the OpEx as a percentage of sales look like?

Once the volumes go back to 2019, our OpEx as a percent of net of sales should be much improved, right? The actions that we've taken over 2020 to really reframe our operating structure should not go back to those levels. These were changes that were permanent in a structural basis for the most part and have really reset the groundwork. So as we said before, when we come out of this, we'll come out fighting because we're in a much better position than we were going into it. So there should be improved margins, improved OpEx as a percent of net sales.

I think just to ground us all as Horizon was a few months ago, we announced that we've streamlined commercial operations, which, by definition, reduced some operating expenses, but it's really about focus. And it's about us investing where we see the intersection of the opportunity between the brand, the product offer, the consumer need, the right level of profitability so that we can grow over the medium to long term and then continue to grow into those reframed categories. To Chad's point, we'll have a reset once the volumes get to those levels. Now by that time, we should have reached our growth trajectory that we're looking to have, and then we'll be reinvesting both in structural investments, CapEx, and then in OpEx where necessary.

I'm sorry, I have a follow-up question, another one, last one from my side. I have seen a couple of press articles stating that the sanitary situation in India was improving quite strongly. Do you see this on your business? Or is it too early?

I think if you followed India closely during 2020, it was probably one of the most volatile and unpredictable, sanitary and business environment, at least that we had to work through at a global level. It's getting a little bit better. I think it's a little bit too early to cry victory, although, as I said, our plan -- or the models that we've used to build our plan are based on a significant rebound of business and the Stationery segment in India. At Q1, we'll be able to either confirm that positive trend or give you an update. But like everyone, first of all, we want the safety of our key members. We do have a lot of team members in India. And we want to make sure that we're leading into a positive rebound and not a volatile one.

We have a next question coming from the line of Marie Fort from Societe Generale.

I've got one question -- many questions about Stationery. The first question is to know what caused to you to delay in back-to-school orders from South and East Africa during Q4 in percentage points of your sales? Second question is to know what represent for you today the office specialists in your turnover. Also, I would like to know what represent the Coloring segment in terms of sales in 2020 compared to 2019, for instance. And also, it seems in your projections that the rebound for the Stationery division is quite modest despite the fact that, in fact, school are -- remain open in most of the countries. Why are you keeping such modest approach? And how do you set your production capacity? Would you be able to meet the demand if it's rebound more than you are expecting?